Economic growth in Sub Saharan Africa will accelerate this year to 6,7 percent, the highest in a decade, but more reform is essential if the gains are to stabilize and broaden, the IMF (Valutafonden) said Friday.
The International Monetary Fund (IMF) said in its annual report on Sub Saharan Africa that while oil-exporting countries would likely see their economies expand by 10 percent or more, non-oil states will also grow by around 5 percent in 2007.
The forecast compares with 5,4 percent growth last year, and the Fund said trend growth appeared to be gradually inching towards the 7 percent established under the Millennium Development Goals aimed at reducing poverty on the continent.
“The higher growth trend in Sub-Saharan Africa is attributable both to positive external developments, such as foreign demand and high commodity prices, and strong domestic investment and productivity gains”, said the Sub Saharan Africa Regional Economic Outlook.
“Sound economic policies in most countries have also played an important role in supporting these outcomes”, the report added. For example, the oil-producing countries in Sub Saharan Africa have benefited from large windfall profits in recent years and, in contrast to previous commodity price booms, they have saved a significant part of their additional revenue.
“The challenge for public policy and policymakers is to create the necessary space for higher and effective public spending”, said the report.
The biggest risks to the region are a slowdown in global growth and its effect on prices for oil and other commodities, as well as consequences for interest rates and investor sentiment, the IMF said.
Because most local debt markets in the region are still in early stages of development, sharp reversals of investment flows could be dangerous. Countries should improve public debt management and financial systems, the report said.
Kilde: www.worldbank.org
